Sri Lanka plans to open a $ 130 million fuel bunkering terminal with a capacity of 82,000 metric tonnes at its new Hambantota port in May, the island nation’s Ports Authority said on Friday. Hambantota, which opened in November, is set to be Sri Lanka’s biggest port once completed and give the Indian Ocean country access to traffic on one of the world’s biggest East-West shipping lanes, located a few kilometres off its southern coast.

“We will start bunkering in May,” Sri Lanka Ports Authority, Chairman Priyath Wickrama, told Reuters.
“Our target is to reach 4 million tonnes storage, with bulk transhipments.” China Exim Bank has loaned $ 77 million toward the cost of the terminal, which the Ports Authority will operate. China has loaned Sri Lanka the bulk of the money to build the $ 1.5 billion port.
The Ports Authority has said China would have no operational role in the bunker terminal, the only part of the port not open to external investment. Sri Lankan bunker firms want the government to open up to the private sector ship fuel supplies at a new port on the south coast close to the main shipping route, officials said.  

The market for ship fuel can be expanded as hundreds of vessels daily sail past the new Hambantota port which was opened last November, they said.
The Hemas group has announced it plans to start bunkering operations at Hambantota in May and is buying four bunker barges. The SLPA has said bunkering will not be opened to private suppliers in Hambantota as it wants to keep the business for itself to earn revenue on ship fuel sales to help repay loans from China taken to build the port. But Sri Lankan bunker firms are lobbying for the bunker business to be opened to the private sector, saying increased competition and efficiency will expand the market.

Sri Lanka Shipping, one of the eight licensed bunker suppliers in Colombo port, has already submitted a proposal to the SLPA to sell ship fuel in Hambantota when it invited investments for industries in the new port.
"We submitted a proposal to supply bunkers under port services," said managing director Mohamed Reza. "We're waiting for a response."

Port operators usually do not get involved in supplying ship fuel which is left to the private sector in other ports, he said.
"People have to go in there and invest and start marketing and offer efficient services at competitive prices to build a market."

Bunker sales at Colombo port increased after a private sector monopoly was broken and more suppliers allowed with prices also falling. Another supplier, Lanka IOC, the local unit of Indian Oil Corp., is also eyeing bunkering at Hambantota.
"We're extremely keen to do bunkering at Hambantota," LIOC managing director K R Suresh Kumar said.
"We see a lot of potential as it is a strategic location which can attract ocean going vessels on the East-West shipping route. We've conveyed our interest to the authorities and hope everyone will get an opportunity along with the SLPA."

Suresh Kumar said the SLPA can earn revenue by hiring bunker fuel storage tanks now under construction to the private sector which can do the marketing and selling.
"It is not necessary for the entire marketing of bunkers to be handled by the SLPA. By allowing more players the business can expand."

Irshad Mushin, director of maritime transportation of Hemas group which is expanding investments in shipping, said private bunker firms could use their global networks to attract ships to take bunkers at Hambantota.
"A proper strategic approach to bunkering needs suppliers who have global networks like bunkering in hubs like Singapore, Fujairah and Rotterdam," he said.
"They have long-term contracts with shipping lines with fleets of big vessels like bulk carriers and oil tankers which take on very large volumes of fuel."

Such an approach would help the port to capture a bigger market for ship fuel than attracting casual callers looking to top up on fuel at the closest port while passing the island.
"While the tank farm is being built the possibility or feasibility of using floating storage should be looked at until the farm is completed," Mushin said.